Illustration of the impact of cloud computing on IT industry and outsourcing

The characteristics of cloud computing and its impact

Cloud computing is the delivery and usage pattern of IT infrastructure and services, which means getting the resources and services you need through the network on an as-needed and scalable basis. Simply put, cloud computing services allow users to access resources and services on remote servers over the Internet in any location. Cloud computing as a distributed processing, parallel processing and grid computing development, and related concepts have significant differences. Different from grid computing aggregation decentralized resources support large-scale applications (a large application is divided into multiple execution), cloud computing is a relatively concentrated resource running decentralized applications (a large number of decentralized applications in a number of large centers to perform). Unlike SaaS (software as a service) only software, cloud computing includes not only software but also hardware (such as IT infrastructure), software and hardware do not require user-purchased configurations, and the cloud's service model includes both pass (platform or service) and Laas (infrastructure, service).

The impact of cloud computing on hardware. With the development of cloud computing technology and the maturing of business model, the cost advantage and ease of use will lead more users to adopt cloud computing, and the demand of ordinary users for IT hardware will no longer extend the continuous growth of the past, but gradually reduce, and eventually transition to only keep the client state. On the other hand, cloud computing service providers will purchase and deploy it hardware in large quantities to form cloud services capabilities. However, the increased hardware requirements of cloud service providers will be less than the reduced hardware requirements of ordinary users. Due to the equal number of computing needs, cloud computing providers concentrate on services less and more efficient than the computing power of each user's services, which has long been statistically proven.

The impact of cloud computing on software products. The impact of cloud computing on software products, particularly the substitution of packaged software, is already evident. For example, Google Docs currently has more than 25 million users, the U.S. General Service will start using Google's cloud-based e-mail and calendar services, Microsoft's Office suite products pose a huge competition threat, Microsoft forced to launch the live office. In order to adapt to the trend of cloud computing, 80% of Microsoft's business already uses cloud computing, the future 80% of resources and 80% of research and development power will be put into the cloud project. In addition to the alternative impact of mainstream packaged software products, cloud computing may be a big hit to Non-mainstream software. At present, many small and medium-sized software enterprises rely on the survival of the project system, in the future, there may be excellent online replacements on the Internet, while the low cost and stability of cloud computing services and the network externality of software will lead to a large loss of customers ' resources in small and medium software enterprises, and the future of small and medium software enterprises or to service transformation or exit the market.

The impact of cloud computing on IT services. The impact of cloud computing on IT services is relatively less than the impact on software products. IT services are specifically related to product maintenance services (Hardware maintenance services, software maintenance services, etc.), it Professional services (IT consulting services, system integration Services, IT outsourcing services, etc.), integration and development services. The rise and spread of cloud computing services will significantly reduce the need for hardware maintenance services and software maintenance services, but also affect system integration, IT outsourcing services, integration and development services to varying degrees, and IT consulting services are not easily replaced by cloud computing. On the other hand, IT services can provide customized, personalized services, while the services provided by cloud computing are generally standardized (although they can be personalized but not customized). The higher the level of IT services, the less affected by cloud computing, the higher the customization requirements of IT services, the less affected by cloud computing.

Second, the impact of cloud computing on different types of outsourcing

Outsourcing is the organization will be based on information technology and network Non-core business, to purchase services to the professional information technology service providers to bear. By business type classification, outsourcing can be divided into information technology outsourcing (ITO), which is directly related to it functions, and business process outsourcing (BPO) and knowledge processing outsourcing (KPO) which are not directly related to it functions. The advent of cloud computing will have varying degrees of impact on different types of outsourcing operations.

The impact of cloud computing on Ito. After the advent of cloud computing, some of the original outsourcing customers will consider turning to cloud computing services. According to a 2010 Accenture survey of more than 100 it executives, mainly large companies and government agencies, 43% of respondents are trying to use cloud computing with limited effort, and 88% of respondents plan to use cloud computing for the next 2 years. Whether to continue with the traditional form of outsourced services or to cloud computing services depends on the way cloud computing replaces traditional outsourcing. The main difference between cloud computing service and outsourcing service is the change of service mode. In general, outsourcing can provide customized personalized services, cloud computing provides a relatively uniform standard of service. In terms of technology, to what extent is standard service able to tailor services for average smaller generations? On the demand side, to what extent are customers willing to sacrifice the benefits of customization for low-cost ease of use? This determines the extent to which cloud computing affects Ito.

The impact of cloud computing on Bpo/kpo. The advantage of cloud computing service is that it provides the technology substitution, but it is difficult to replace the human-based outsourcing service, such as financial management, data entry, human resource management, etc., these outsourcing services ultimately need the manpower to complete, the information technology and the network's main function is the information transmission and the interaction. Cloud computing, as a technology for resetting resource efficiency, is not an alternative to human technology (such as a steam engine), and therefore does not serve as an alternative to BPO, but can affect the technical approach and efficiency of BPO services. Similarly, KPO as a higher level of creative services, more difficult to be replaced by cloud computing.

How cloud computing affects outsourcing

Cloud computing, as a new technology and business model, has an impact on outsourcing from different sources. On the one hand, cloud computing can replace outsourcing to some extent, thereby reducing outsourcing demand. On the other hand, cloud computing will change the way it is outsourced, pushing outsourcing to run more efficiently. In addition, cloud computing will introduce new strong competitors to the outsourcing market.

Alternative Outsourcing services. As we can see from the previous analysis, the degree of substitution of cloud computing for different types of outsourced services varies. The substitution of Ito is larger, the substitution of the BPO service based on manpower is small, and the KPO service based on human creativity is difficult to replace. There are also differences in the degree of substitution between different subdivision areas for Ito.

Change the way you outsource. Although cloud computing to some extent to the outsourcing has been replaced, but more important also for the outsourcing provides a huge development opportunity. With cloud computing technology, outsourced service providers can provide services to customers at lower cost and efficiency. Whether it is ITO, BPO or KPO, it is possible to achieve greater development with the help of cloud computing. Leading outsourcing companies both at home and abroad have realized this opportunity and started to make great efforts in cloud computing to provide outsourcing services based on cloud. In 2010, China's largest IT outsourcing provider Neusoft and Japanese electronics manufacturer NEC Set up a cloud computing joint venture to provide cloud computing services for Chinese SMEs and export manufacturers. Cloud computing will restructure the existing outsourcing industry, the future outsourcing service provider or the development of operating cloud platform, or focus on the cloud, based on clouds to provide customers with more and better services to become the cloud industry chain of important players.

Add new entrants. The traditional software outsourcing model to the cloud-based outsourcing services to the cloud leader provides the opportunity to enter the field of outsourcing. The IT giants, represented by Amazon and Google, now have a leading edge in cloud computing, relying on strong strength (versus traditional outsourced service providers) and a strong own cloud computing platform to enter the outsourcing arena, becoming a strong competitor for traditional outsourcing service providers, It may change the existing competitive structure of outsourcing market.

Iv. coping strategies of Outsourced service providers

Cloud computing technologies and business models are maturing, and the tendency for customers to shift from traditional service outsourcing to cloud computing services has become increasingly apparent.

More than half of respondents said the quality of outsourced deliveries was lower, while cloud computing and SaaS received more acclaim, with most respondents saying the quality of cloud delivery was better and 44% per cent of respondents were planning to expand the use of cloud computing, according to a 2010 survey by InformationWeek Magazine. Faced with such a fast-changing market, how can traditional outsourcing service providers cope with the fate of being eliminated and gain new status under the new market environment?

For large outsourcing service providers, actively build their own cloud computing services platform, and gradually transfer the traditional outsourcing services to the cloud platform, strengthen customer loyalty, locking quality customers, in order to remain invincible in the future competition. For small and medium-sized outsourcing service providers, can join a large cloud computing services provider operating system, focus on cloud services, become a cloud computing services platform of important participants, and large enterprises to form a stable cooperative division of labor Relations.

In short, cloud computing, as a new technology and business model, is bound to have an important impact on outsourcing, and the impact will be further revealed in the future. Outsourcing service providers should adapt to the change trend of IT industry, seize the opportunity, actively change, positive response, to achieve in the new era of it!

(Responsible editor: Liu Fen)